Solar panels can increase home value, especially when the homeowner owns the system. The increase is not guaranteed, and buyers may not pay back the full installation cost. A Lawrence Berkeley National Laboratory study of 22,822 home sales from 2002 through 2013 found that buyers paid a premium for homes with solar systems.
A permitted, well-maintained system with clear ownership, reliable energy production and years of useful life is more likely to contribute to a home's sale price.
Leased solar panels and power purchase agreements, or PPAs, are different. A third party owns those systems, so lenders and appraisers may exclude them from the home's appraised value.
Solar Panels and Home Value at a Glance
| Solar arrangement | Likely effect on home value | Main issue |
|---|---|---|
| Owned outright | Often increases value | Value depends on local buyer demand and system quality |
| Solar loan without repossession rights | May increase value | The loan and lien must be documented |
| Panels financed as personal property | Often excluded from appraised value | Separate debt may use the panels as collateral |
| Solar lease | Usually adds little direct appraised value | The buyer may need to assume the contract |
| Power purchase agreement | Usually adds little direct appraised value | The buyer inherits a long-term electricity contract |
| Old, poorly documented or unpermitted system | May reduce marketability | Buyers and lenders may view the system as a liability |
How Much Value Can Solar Panels Add?
There is no fixed percentage or dollar amount. The value depends on the system's size, age, ownership, expected electricity savings, utility rates, local solar adoption and comparable home sales.
The Lawrence Berkeley National Laboratory study found an average premium of about $4 per watt, or approximately $15,000 for an average 3.6-kilowatt system. Because the sales took place from 2002 through 2013, the result is historical evidence, not a guaranteed current valuation.
A later Fannie Mae and Berkeley Lab analysis reviewed more than 554,000 transactions in California, Connecticut, Massachusetts and Oregon from 2011 through early 2020. The analysis found that homeowner-owned solar systems were associated with higher sale prices. Its size-based model estimated a premium of about $2.66 per watt, or roughly $14,500 for an average 5.5-kilowatt system. The researchers also found that the premium had declined as installation costs fell and solar became more common.
These figures are not a formula for pricing a home. Appraisers are not supposed to add the installation invoice to the property's value dollar for dollar. Fannie Mae requires appraisers to review comparable sales and determine how the local market responds to the energy-efficient feature.
Why Owned Solar Panels Can Increase Value
Owned solar panels may make a home more appealing because they can provide:
- Lower electricity bills
- Some protection from rising utility rates
- An energy system that stays with the property
- Less reliance on grid electricity
- Battery backup when paired with energy storage
- Appeal to buyers who prioritize energy efficiency
The U.S. Department of Energy describes homeowner-owned solar arrays as upgrades that can increase resale value. The department also cites studies showing that buyers may pay more for homes with average-sized solar systems.
The resale benefit is usually easier to establish when the system is owned free and clear, the roof is in good condition, and the seller can show production records and utility savings.
Do Leased Solar Panels Increase Home Value?
Leased panels and PPAs usually do not add the same value as owned panels.
Under Fannie Mae guidance, leased systems and systems covered by PPAs are treated as personal property and generally cannot be included in the home's appraised value. A homeowner-owned system may be considered if it meets the usual appraisal requirements.
A lease or PPA can also make the sale more complicated. The buyer may need to:
- Assume the remaining agreement.
- Meet the solar company's credit requirements.
- Accept the existing payment terms.
- Wait for the seller to buy out or transfer the contract.
The Consumer Financial Protection Bureau says sellers with outstanding solar financing commonly either arrange for the buyer to assume the loan, when allowed, or pay the remaining balance before closing.
A lease or PPA does not automatically make a home unsellable. It can, however, reduce the number of buyers willing to proceed and delay closing when the contract, lien or transfer requirements are unclear.
What Determines Whether Solar Adds Value?
1. Ownership and Financing
Ownership is one of the main factors. A paid-off system is easier to evaluate than a leased system or one tied to a separate lien.
A financed system may still contribute value if it is treated as a fixture attached to the real estate and cannot be repossessed after a default. Panels financed as personal property generally cannot contribute to the appraised value under Fannie Mae guidance.
2. System Age and Condition
Newer panels with substantial warranty coverage are generally more valuable than an older system nearing inverter replacement or the end of its expected service life.
Give buyers:
- The installation date
- Panel and inverter warranties
- System size in kilowatts
- Production records
- Maintenance records
- Battery details, if applicable
3. Roof Condition
Solar panels add less value when the roof needs immediate replacement. Buyers may have to pay to remove and reinstall the array.
If the roof is near the end of its useful life, replacing it before installing solar can make the system easier to sell and reduce problems during a future transaction.
4. Local Electricity Costs
Solar savings are usually worth more where electricity prices are high and utility rules make rooftop generation financially attractive. Net metering and other utility policies vary by location, so the same system can have different resale value in different markets.
5. Documentation and Permits
A permitted, code-compliant system is easier for an appraiser, lender and buyer to evaluate. Missing permits, unclear ownership or an unresolved UCC filing can delay the sale or prevent the system from receiving contributory value.
How to Maximize Solar's Value When Selling
Before listing the home, prepare a solar information package with:
- The purchase or financing agreement
- Lease or PPA transfer requirements, if applicable
- A loan payoff or buyout statement
- Permit and inspection records
- Utility interconnection approval
- Recent electricity bills
- Solar production history
- Equipment warranties
- Repair and maintenance records
- Battery specifications and warranty, if installed
Tell the real estate agent and appraiser that the home has solar. Ask the appraiser to review the system's ownership, size, age, production and comparable sales. The installation cost is not necessarily the system's market value.
Bottom Line
Solar panels can increase home value, but owned systems usually provide the clearest resale benefit. The likely premium depends on local demand, electricity costs, system age, roof condition and documented energy savings.
A leased system or PPA usually brings less direct appraised value and more paperwork during the sale. For homeowners considering solar, the strongest financial case combines long-term electricity savings with possible resale value rather than relying on resale value alone.